DBRS Morningstar Confirms All Classes of CSMC 2020-TMIC

DBRS, Inc. (DBRS Morningstar) confirmed its ratings on all classes of Commercial Mortgage Pass-Through Certificates, Series 2020-TMIC issued by CSMC 2020-TMIC as follows:

-- Class A at AAA (sf)
-- Class X-NCP at AAA (sf)
-- Class B at AA (low) (sf)
-- Class C at A (sf)
-- Class D at A (low) (sf)
-- Class HRR at BBB (high) (sf)

All trends are Stable.

The rating confirmations reflect the transaction’s overall stable performance since issuance. The loan is secured by The Mall in Columbia, a 1.4 million-square-foot (sf) regional mall in Columbia, Maryland. The $250.0 million loan has an initial maturity date in December 2022, with a single one-year extension option and is interest only (IO) through the duration of the fully extended loan term. As of this writing, the borrower has not executed its available extension option, and the servicer has confirmed that no payoff quote has yet been issued. The loan is sponsored by Brookfield Asset Management, which has owned the mall since 2018 after it acquired General Growth Properties, Inc. The loan is structured with extremely rigorous cash management provisions with all excess cash flow being trapped in a lender-controlled account. Additionally, a debt service shortfall guaranty remains in place through the loan’s fully extended term.

The mall is in an affluent area between Baltimore and Washington, D.C. It is anchored by Macy’s (18.1% of net rentable area (NRA), expiring August 2030), Nordstrom (14.0% of NRA, expiring February 2030), and JCPenney (noncollateral, expiring August 2051). A noncollateral Lord & Taylor previously anchored the property as well but vacated in Q4 2020 after its parent company filed for bankruptcy. No replacement tenant has been signed yet. As of June 2022, the mall was 96% occupied. Major tenant AMC Theaters (6.8% of NRA) has a lease expiration in December 2023, but otherwise upcoming rollover is limited, with leases representing less than 2% scheduled to roll through the remainder of 2022 and an additional 5.4% in 2023.

Although property performance expectedly suffered during the Coronavirus Disease (COVID-19) pandemic, sales remained resilient and are improving according to the most recent reporting. For the trailing 12-month (T-12) period ended June 2022, total mall sales and inline tenant sales (excluding Apple) were $310 per sf (psf) and $511 psf, respectively. This is up from $246 psf and $319 psf for the T-12 period ended June 2021. Excluding Apple, inline sales were $523 psf in 2019. Net cash flow (NCF) has been stable, with the annualized June 2022 figure reported to be $32.1 million, in comparison with the YE2021 NCF of $28.9 million and the issuance DBRS Morningstar NCF of $28.1 million. The DBRS Morningstar all-in loan-to-value ratio is 68.9%.

Given the collateral quality, market location, historical performance, institutional sponsorship, and strong structural features, DBRS Morningstar projects the loan will continue to perform in line with issuance expectations.

ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS
General Considerations
There were no Environmental/Social/Governance factors that had a significant or relevant effect on the credit analysis.

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/396929 (May 17, 2022).

Class X-NCP is an IO certificate that references multiple rated tranches. The IO rating mirrors the lowest-rated applicable reference obligation tranche adjusted upward by one notch if senior in the waterfall.

All ratings are subject to surveillance, which could result in ratings being upgraded, downgraded, placed under review, confirmed, or discontinued by DBRS Morningstar.

The DBRS Viewpoint platform provides additional information on this transaction and underlying loans including DBRS Morningstar metrics, commentary, servicer-reported cash flows, and other performance-related data. For complimentary access to this content, please register for the DBRS Viewpoint platform at www.viewpoint.dbrsmorningstar.com.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The principal methodology is North American CMBS Surveillance Methodology (October 3, 2022), which can be found on dbrsmorningstar.com under Methodologies & Criteria. For a list of the structured-finance-related methodologies that may be used during the rating process, please see the DBRS Morningstar Global Structured Finance Related Methodologies document, which can be found on dbrsmorningstar.com in the Commentary tab under Regulatory Affairs. Please note that not every related methodology listed under a principal structured finance asset class methodology may be used to rate or monitor an individual structured finance or debt obligation.

The DBRS Morningstar Sovereign group releases baseline macroeconomic scenarios for rated sovereigns. DBRS Morningstar analysis considered impacts consistent with the baseline scenarios as set forth in the following report: https://www.dbrsmorningstar.com/research/402907.

The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

Please see the related appendix for additional information regarding the sensitivity of assumptions used in the rating process.

For more information on this credit or on this industry, visit www.dbrsmorningstar.com or contact us at [email protected].

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